Hundreds of banks will fail, Roubini tells Barron's (may cost taxpayers $2 trillion)

[UpInArms]

Source: Reuters

NEW YORK, Aug 3 (Reuters) - The United States is in the second inning of a recession that will last for at least 18 months and help kill off hundreds of banks, influential economist and New York University Professor Nouriel Roubini told Barron's in Sunday's edition.

Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Roubini said -- at least $1 trillion and more likely $2 trillion.

The banks will become insolvent because of mounting losses as a result of the housing bust and because they have only written down their subprime loans so far, he said. Still in front of them are their consumer-credit losses, for which they lack the reserves, Barron's reported.

<snip>

Now, Roubini told Barron's, the government is overregulating, bailing out troubled participants and intervening in every market.

"The regulators should investigate themselves for bailing out Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), the creditors of Bear Stearns and the financial system with new lending facilities. They have swapped U.S. Treasury bonds for toxic securities," he told Barron's. "It is privatizing the gains and profits, and socializing the losses as usual. This is socialism for Wall Street and the rich."

Read more: http://www.reuters.com/article/bondsNews/idUSN0344130720080803?sp=true

[truedelphi]

1. My ten dollars says there may not be a abnk standing by Jan 20th of 2009.

Bigest transfer of wealth ever. The banks being propped up, the Haliburton in Iraq.

A swindle the likes of which no one has ever seen.

[Doctor Cynic]

5. Will you still have ten dollars by then, if all the banks fail?

[RUMMYisFROSTED]

53. Of course.

"Please don't squeeze the ten dollar bill."

Whipplenomics.

[Hestia]

6. And just like South Africa, Russian, the Southern Cone, we will be saddled

with massive debt, just like The Shock Doctrine. We will have to kick out the foreign investors and take back our national/natural resources. Either that, or just say screw it and not pay the debt. What is the worst thing to happen if we did that? We'd finally get rid of the Federal Reserve, which has been the foot on our necks. Obama should do like JFK tried to do with Executive Order #11110 - issue Silver Certificates and take back our coinage. With one massive stroke of the pen, all that interest we pay the Federal Reserve will disappear. I see no other way.

[bdf]

10. Yes, but it will take 10 billion dollars to buy a loaf of bread (n/t)

[indepat]

12. And I was thinking only a 100 million dollars: silly me!

:P

[truedelphi]

13. I tried to get my fellow members here at DU to understand the Fed

By posting this here:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3669902

But far too little of the membership wants or cares to understand the real problem, that is, The Fed.

Of course, maybe people went off and watched the video and got abosrbed by it, and never made it back to the topic.

It was an excellent video.

[defendandprotect]

37. And presumably a few will have pocketed all these profits . . where is it?

And do we let them come back in and buy us out --- lock, stock and barrel?

[Demeter]

69. They Will Have Pockets Full of Worthless Paper

The assets will be fixed in place, and appropriated for the people. There is no way they can win, and they are just now realizing how badly they have screwed themselves over in trying to screw us.

No man is an island--John Donne

No global economy has any permanent winners and losers. We all win, or we all lose.

[defendandprotect]

104. .... but isn't the access to taxpayer dollars in bail-outs how it's done . . .?

I'm trying to absorb your overall perspective . . .

but in the immediate future, they win -- do they not?

Won't there be Swiss bank accounts loaded with deeds to land -- cash --

What I'm trying to say is not everyone "wins" and "looses" at the same time --

and it would take some time to reach a worldwide wipe-out?

[Demeter]

122. The Dollar Will Be Repudiated

There isn't enough gold in the world to convert paper money into. There isn't enough land available to purchase, and it's an illiquid asset, easily confiscated. Ditto shares of stocks--companies can be nationalized. Forget bonds--they have destroyed the value of bonds, even Treasuries, with their piracy and fraud.

The wealthy on paper--they have no skills, no friends, no family with skills or friends--will be crushed by the Ponzi schemes they've been running.

People who are not psychopaths, who respect and earn respect, will form new associations and rebuild.

It will be brutal. It will be catastrophic. But the ones with too much will find they have nothing worth having.

[truedelphi]

127. I think you are nailing it - the people at the top are the ones

In charge of the casino. They know which number to bet on because they know the outcome.
(It's their game and they rig it so they win.)

Right now, they are investing in Euros, and Swiss francs and even Chinese currency.

But ultimately it probably will be that the only number to bet on is gold or some other lucrative metal. (possibly they are getting the message that oil, as a long term strategy, is now a dinosaur - since India and Mexico are now promoting the car that goes 120 Miles on 3 cents worth of compressed air.)

[salguine]

38. Rather than just kick out the foreign investors, we should kick out Congress for

turning a blind eye to—and benefiting by—the insane, irresponsible financial practices that brought this about in the first place. It's not like any responsible economists didn't see this happening. Wall Street operates like the fucking Mafia, and as long as they keep shoveling cash to our elected representatives, this is going to continue. If you or I ran our business this way, we'd go to prison. They get government bailouts and invitations to state dinners at the White House.

So what are we, as a people, going to do about it?

[defendandprotect]

105. You're going to vote for a party which is also being eaten thru by

the same corporate-fascist forces that run the GOP ---

and unless we get IRV voting and third parties going we are not going to have any other
options ---

the peaceful means of changing government will be gone ---

[petwlkr]

58. There are many who believe

That Executive order #11110 is what ultimately got JFK killed.

[defendandprotect]

107. Changing printing of money to our Treasury and taking it out of

the hands of the Fed?

[SpiralHawk]

9. "Shock and awe, baby. Smirk." - Commander AWOL & republicon cronies

[namvet73]

64. I think I should keep my money in my socks like Chester in Gunsmoke. n/t

[L0oniX]

93. Your $10 may only be worth $5 by then.

[happyslug]

97. You believe in a duplication of Febuary 1933 till March 4th, 1933?

70% of all banks were closed by March 4, 1933, 37 states (including New York State which closed the New York Banks) had declared Bank Holidays till the Bank crisis was resolved. FDR upon his inauguration had Congress pass a law giving him the power to do so on the National Level, which eh did.
Background on the Bank Crisis of 1933:
http://www.bos.frb.org/about/pubs/closed.pdf
http://eh.net/encyclopedia/article/wicker.banking.panics.us
http://www.thebhc.org/publications/BEHprint/v013/p0105-p0115.pdf

History of the FDIC (Which goes into the Bank Crisis of 1933)
http://www.fdic.gov/bank/analytical/firstfifty/

[ozymandius]

2. At which point does Phil Gramm become radioactive?

This was his doing, after all.

[Davis_X_Machina]

3. Nine people know Phil Gramm...

...and a hundred million know Britney Spears.

Guess where the coverage is going?

[rontun]

65. You grossly underestimate the knowledge of Americans.

Four hundred and twenty-seven people know who Phil Gramm is, nearly all of whom have accepted contributions from his lobbying firm. And as for Britney, I do believe over 200 million Americans know who she is, half of whom want to be her, and the other half want to "do" her - including John McCain.

[nolabels]

83. Indiscreet women are a big turn-off to some..........

but for the underestimating part you are probably correct, to degree most can't fathom, America is quite un-knowledgeable and misinformed

[happygoluckytoyou]

85. i dont know about "doing" brittany... but not if you include McCain... i'd wake up screaming

[Zorro]

4. Roubini's opinions are usually quite interesting to read

He seems to have quite a Chicken Little attitude about the economic situation; not saying his predictions won't pan out in the end, but he's more remorselessly negative than just about any other economist.

Kunstler is also an interesting person to follow; his predictions are just as dire and thought-provoking about the end of cheap energy and its impact on future society.

[UpInArms]

7. Roubini has been quiet prescient

jmho

[Zorro]

11. My concern is hyperinflation

I sense we are be heading to the biggest economic crisis since the 30s, and it will be a combination of hyperinflation combined with a severe recession with lots of unemployment and reduced government expenditures.

The upshot will be that the currency will be significantly devalued, with the price of standard items increasing while home prices simultaneously reaching a plateau that will still make them generally unaffordable to many.

Hard times are a'comin, and it will be up to the Democrats to fix the mess created by Republican mismanagement of the economy.

[truedelphi]

14. ABout a week ago while investigating the parts of the economic

Crisis tht I felt my poor addled brain could handle, I found out that the money supply had been over stimulated to the tune of 62% in the decade before the Great Depression (What we call "The Roaring Twenties")

And guess what the current rate of over stimulus of the money supply is WORLD WIDE!! That's right, it clocks in at 62 % !!

[MadMaddie]

21. Hey According to the Republicans "That history is so yesterday"

they are charting the future....!!:sarcasm:

The problem is the idiots are charting the future to redo the past!! It's a circle and they are too stupid to understand it.

[Doremus]

27. Your poor addled brain is way better than mine, lol.

:)

How does one over stimulate the money supply and does a printing press have anything to do with it? ;)

[DemReadingDU]

99. money in circulation

As of December 2007, currency in circulation—that is, U.S. coins and paper currency in the hands of the public—totaled about $829 billion dollars. The amount of cash in circulation has risen rapidly in recent decades and much of the increase has been caused by demand from abroad. The Federal Reserve estimates that the majority of the cash in circulation today is outside the United States.
http://newyorkfed.org/aboutthefed/fedpoint/fed01.html


Are there any links to determine what the amount of currency is today? I'm curious to find out if the U.S. actually is circulating more currency because of the financial crisis.
Thank you.

[sendero]

20. I believe..

... we are in for a deflationary depression, not hyperinflation.

The reason I believe believe that is that to have hyperinflation you have to have wage inflation, and I don't see where that can come from.

But, it's really hard to tell which it will be:)

[roamer65]

26. The hyperinflation will come from monetary inflation, not wage inflation.

M3 money supply is through the roof. See the peak in 2008? That is actually a record, beating Nixon's previous record for M3 growth.

The only chance for a deflationary depression is to pull a "Volcker" and shove interest rates to 20% to kill inflation and the economy.

They won't do that this time around, they're going to grow M3 at record numbers and fudge the inflation figures.

Bernanke is more of an Arthur Burns, than he is a Paul Volcker.

[lonestarnot]

29. Hey,

Where did you get that? I thought those numbers were private since 2005?

[roamer65]

31. The government stopped the "official" calcuation, but...

smart economists know how to calculate it from the remaining reported figures.

http://www.shadowstats.com

[DemReadingDU]

100. money in circulation

As of December 2007, currency in circulation—that is, U.S. coins and paper currency in the hands of the public—totaled about $829 billion dollars. The amount of cash in circulation has risen rapidly in recent decades and much of the increase has been caused by demand from abroad. The Federal Reserve estimates that the majority of the cash in circulation today is outside the United States.
http://newyorkfed.org/aboutthefed/fedpoint/fed01.html


Are there any links to determine what the amount of currency is today? I'm curious to find out if the U.S. actually is circulating more currency because of the financial crisis.
Thank you.

[roamer65]

131. M1 is the measurement of cash in the system

M1 is the actual printed cash in the system, plus bank accounts that are easily convertible into currency (i.e. checking accounts). M1, at least by this chart, is actually shrinking somewhat. Makes sense since most commerce in the US is done by some sort of electronic transfer. Also I would not be surprised if some of the shrinkage in M1 is due to people depleting their savings in order to pay mortgages and cover rising food expenses.

What you are looking for is M0 and I'm not sure many pay much attention to that figure anymore, other than for calculating the broader money measures like M1, M2 and M3.

[DemReadingDU]

135. Yes, but what is the dollar amount?

I can't seem to locate a government chart that shows exactly how much this amount is today, as compared to last year. Thanks


I found this link, but it doesn't have historical amounts, year by year, or month by month, only text for December 2007.
http://newyorkfed.org/aboutthefed/fedpoint/fed01.html



edit:
shadowstats only shows percentages, I'm looking for actual numbers. Maybe those actual numbers are contained in the subscription?

[lonestarnot]

133. Cool! I loves me some smart people!

:loveya:

[roamer65]

32. Here's a chart showing the true inflation rate.

The blue line is the same measurement as used in 1980, during our last stagflation. Notice the divergence around 1982 as Raygun began to fuck with the CPI measurements.

[DaLittle Kitty]

42. Nice Graph... We Are FUCKED!

Elect John Russell to Congress at least he can understand this shit... Ginny Brown-Waite cannot! www.johnrussellforcongress.com

:)

[RUMMYisFROSTED]

55. 8%..then no M3...voila! 16%.

:think:

[trackfan]

115. That is almost word for word what I tell people. n/t

[roamer65]

23. John Williams at shadowstats.com is predicting a hyperinflationary depression.

http://www.shadowstats.com

If i remember correctly, he said it should be in "full force" by 2010.

[Imagevision]

50. geeezusss! this makes want to go to the bank tomorrow and take out my savings...

[teenagebambam]

86. You have savings?

lucky.

[Wizard777]

8. So 9 trillion to the national debt and another 2 trillion for banks. That's 11 trillion.

Ooookay pretty soon they are going to have to start calling Bush The Man Who Sold The World.

[truedelphi]

15. And no one today has mentioned the 517 trillion dollar

Speculation in derivatives.

When and/or if that bottom drops out, what then??

[wordpix]

18. no, * hasn't sold the world, he's sold America. There go our national parks, forests, monuments,

bridges and roads. Thanks, BushCo. :puke:

[Lorien]

22. That was the goal of the disaster capitalists to begin with

privatize EVERYTHING so that the corporate takeover would be complete. If the private sector is so fantastic, then why are they talking about bailouts?

[Wizard777]

24. He is allowing our infrastructure to erode. Great shades of Saddam!

Should we give Bush 48 hours to go into exile?

[Zorro]

25. Perhaps one plan to get out of this mess

would be to revector all the laid-off construction workers into programs to repair our crumbling infrastructure.

Perhaps not the same kind of construction work they're used to, but it's still construction work.

[Truth4Justice]

59. Who is going to pay for all that with so many people out of work?

Its not like people can take much more now, with higher taxes, and higher costs of living.

[Megahurtz]

120. Trouble is it's not only Bush.

He has friends.

[roguevalley]

16. welcome to 1929. I wonder how the savings and loans will do. my

little credit union, god help me if she fails. I don't think she will.

[Lorien]

17. Enough with the corporate welfare! They fucked up, let them "pull

themselves up by their own bootstaps", as they're always screaming at the rest of us to do!

[wordpix]

19. to borrow a phrase from Phil Gramm, they're a Wall Street of Whiners

[roamer65]

28. Just wait until the FRB begins mass monetization of 10 and 30 year treasury notes.

I think we are a few months away from this drastic step to stimulate the economy. Inflation will VERY ugly when this process begins.

[DemReadingDU]

101. I'm dense, what does it mean to monetize treasury notes?

Does it mean if I have a 10 year note, say valued at $1000, I can use it as cash at the store to buy groceries?

[roamer65]

132. Google "debt monetization".

That should help you understand the topic. ;)

[DemReadingDU]

134. Thanks,

That helps, lots to explain this concept.

[HCE SuiGeneris]

30. And so it goes...

from prosperity to bankrupt -- financially and morally -- in 8 years. The Neocon terrorists have won.

I have to say, I am not at all happy about it.

[BrklynLiberal]

33. Thank you, BushCo, you selfish, greedy, evil bastards.

[Lithos]

34. Don't think it is a depression ala 1929

The 1 to 2 Trillion dollars is really the same as the cost of the Iraq War. Obviously we need to get out of Iraq and apply the money we're wasting there to our own economy.

I completely agree with his comments about privatizing profits and socializing loss, this has always been the hallmark of corporate welfare which is one of the two major points of Republican hypocrisy (the other being family values).

[creeksneakers2]

35. I'm not buying it

I don't think its going to be anything like that bad.

[Pale Blue Dot]

36. Why not?

I've heard a lot of people argue, when faced with articles backed with evidence like the OP, that it's not "going to be anything like that bad." Why do you think that? What's your evidence to back up that claim? Where are the jobs coming from?

[creeksneakers2]

44. The jobs will come from increased exports

I'm basing my guess on the fact that there is no documentation that the amount of bad mortgages runs in trillions. Also, banks generally aren't holding bad mortgages. They sold the risky ones and kept the safe ones. Some of the big financial enterprises that bought the loans are European. I can't see the US bailing out big European banks. Also, even though there are lots of defaults, there is some cushion because the majority of of borrowers who are paying those ARMs are paying the higher interest rates, meaning a much bigger take off the good mortgages. The first year of the crisis is worst because during that time the banks aren't able to bring the foreclosure to sale. Once the sales commence much of the lost money will be recovered.

The rule over at Kos is that extraordinary claims require extraordinary evidence. So I think its up to the ones spreading this alarm to provide more proof, not the ones who doubt it. For as long as I've been at DU these kind of predictions have been posted. We're all still here.

[Pale Blue Dot]

46. I invite you to visit the Stock Market Watch thread weekdays in this forum.

In it, you will find daily substantiated articles that directly contradict all of your assertions above.

I am a skeptic at heart, and I agree with the "extraordinary claims require extraordinary evidence" argument. The problem is, just like global warming, the evidence is there, but people are choosing to ignore it. Because of this, we are not enacting policies that will cushion are fall or prevent it.

[texastoast]

47. You are right . . . maybe

I would also ask: Did you see the bailouts of the 80s?

I would like to hear about what gives you the (hopeful) skepticism. I for one have seen that Phil Gramm worked very hard as a lobbyist after he left public service to be sure that the banks were deregulated so that they could do these ARMs without restriction.

I saw where Reagan bailed out the S&Ls for his junk bond friends like Charles Hurwitz, Mr. Redwoods Clearcutter, in the 80s.

I would like very much to have some other hope than my own experience. Please post for us all.

[defendandprotect]

39. The fastest wa y to destroy a nation -- democracy -- is bankrupting the Treasury ---

Shouldn't that be treason --- ???

And shouldn't the Congress csre --- ???

[texastoast]

49. You are talking about the "formerly known as the United States"

Gone, baby.

[valerief]

73. Yeah. That was always just a "lip service" United States. nt

[gblady]

40. so what does that mean...

for some of us poor folks who do not own property
and live month to month?

[Pale Blue Dot]

41. In the best-case scenario - nothing.

In the worst case scenario - your employer will no longer be able to pay you. And there will be no other jobs to be found.

[paparush]

43. But, but, but...Bush gave us all a stimulus bonus thingy..

Financial Wizard that he is...

:sarcasm:

[Bulletin Justin]

45. Bette Davis should be here.

 Remember her line in the movie? "Fasten your seat belt. 
It's going to be a bumpy ride."

[texastoast]

51. A bumpy ride that shrubbie planned for us all

So he could make his wealthy "base" more wealthy at the expense of us middle class taxpayers.

Anyone who voted for him is a complete and utter idiot. I wish they could pay for my part of this debacle instead of our kids having to pay for their parents' stupidly voting him into office.

[KansDem]

106. "So he could make his wealthy 'base' more wealthy at the expense of us middle class taxpayers."

His base, of course, being the "haves" and "have mores." I believe this clip can be found in MM's "F9/11" where Bush actually addresses a forum of wealthy as his "base of 'mores' and 'have mores'..."

:grr:

[skoalyman]

57. we shouldn't be surprised

we could see this coming years ago.With the passing of NAFTA. when I had my first job at Jordache by the end of that year it headed to Mexico never to come back.Then along the same time credit was becoming easy to get, loan co.s and payday Co's popped up all over town.My biggest fall debt wise came when I got my first credit card,I did alright until I lost my job, heck I didn't owe but 800.00, then after they added late charges and interest it ballooned over a grand and a half then theirs other debt totaling over 10 grand which I'll never be able to pay back. but enough rambling for now yep were screwed ;(

[Javaman]

92. bumpy ride? meh. imagine a roller coaster with no up. nt

[berni_mccoy]

48. "It is privatizing the gains and profits, and socializing the losses as usual."

That says it all right there.

[texastoast]

52. Self-delete n/t

[roamer65]

54. Meanwhile...the NIKKEI in Japan is down about 160 pts this Monday AM.

[BeHereNow]

56. "Mission Accomplished"

Biggest heist ever perpetuated upon a country.
Unless of course you examine all the heists
pulled on other countries prior to this one
by the same gang of thugs.

BHN

[Megahurtz]

124. To a T. n/t

[sakabatou]

60. Thanks Bush

Now go fuck yourself.

[ScottytheRadical]

61. I'm looking forward to the socialist revolution...

Or, barring that, at least an uptick in struggle. The economic situation is *horrible* and is causing major hardship for everyone but the richest 1% in this country, so I hope that at least something good will come out of it. Solidarity forever!

[greyghost]

77. AMEN!

[Lorien]

88. The last sentence in the OP says it all:

"It is privatizing the gains and profits, and socializing the losses as usual. This is socialism for Wall Street and the rich."

The only "socialism" we'll see will be FOR the richest 1%. At this point only the wealthy are waging class warfare because they own our media. The rest of us can't unite the people to do a damn thing; they're still taking their marching orders from the MSM.

[defendandprotect]

109. ..."democratic socialism" . . . that is ---

and notice that the GOP/fascists are anticipating this in their charges that

Obama is a "socialist" ---

They understand where we're being pushed --- the hatred for capitalism ---

the repeated failures of capitalism --- and the consequences.

It's the public that's a little behind on a full understanding ---

[coalition_unwilling]

114. The American people, right now, seem to have very little

"class consciousness," at least as traditional Marxist-Leninists have used the term. That is, very few Americans analyze their personal situation and their communitiies' situations with respect to their relationship to the means of production.

I write this knowing full well that Lenin distinguished between a 'class in itself' and a 'class for itself.' One can easily say that America manifests the former without manifesting much of the latter. As further proof, I have not heard one peep out of any maintsream politican calling for the U.S. to nationalize its energy industry and infrastructure, compensating where applicable and expropriating where not applicable. Not one word about a necessary step towards a 'socialist revolution'. So while I look forward to its historical inevitability (a la Marx), I am resigned to its probably not happening here in my lifetime.

[sasquatch]

62. The legacy of the Boomers: making America worse by pissing away all of the work and safeguards-

of their parents and grandparents.

[geckosfeet]

66. Not the boomers - post boomer neocon coke addled ivy leaguers.

And kkkArl Rove of course.

And a few hundred thousand wall Street MBA's.

[JHB]

67. Don't try to blame "post boomers"...

...because this train-wreck-in-the-making started when "post-boomers" were still in high school.

Nor are "the Boomers" to blame: this isn't about age and boomers stand to get screwed like everyone else.

This is something that has many "parents", and they don't fit neatly into such broad demographic characterizations.

[dixiegrrrrl]

125. I second that fact...

boomers, like me, are getting caught up in loss of pensions, forced early retirement, stagnant wages and Social Sec. income and rapid growth in living costs.
You said it well, JHB.

[girl gone mad]

71. Nope.

The Reagan worshippers running this Wall Street calamity are primarily boomers, as are Bush and Rove. Sure, they've hired some gen-x and gen-y math whizzes to help them write their trading programs, but it's the boomers running the show in every corridor of power and influence.

[geckosfeet]

129. Not so. I am a boomer and everywhere I look I see 30 an 40 somethings

steering the ship.

Granted Bush, Cheney, Rove and some of of the others in this god awful mis-administration are matginal boomers, but don't try and sell me something that I can see with my own eyes on a daily basis just ain't so.

There is plenty of blame to go around and I don't thing being a boomer or not has all that much to do with it.

[Joanne98]

80. The boomers didn't do it. World War 2 generation. They thru it away.

With Reagan. It goes like this...

World War 1 generation fought for the benefits..

World War 2 got the benefits...Used the benefits, then threw them away because they loved Ronald Reagan and "law and order"..

Baby boomers tried to save the benefits their grandparents had fought for, but lost the war thanks to the Reagan/Milton Friedman revolution.

Gen X sided with World War 2 generation..

The MM's will side with World War 1 and the boomers..

If you notice, there's a pattern. Each new generation sides with their grandparents. Although since birth control, generations are not as defined as they used to be. The pattern still holds true for most of them.

The thugs are in a panic about this. If they can't con this next generation and break the pattern, they are all going to prison for looting the country.

[Hugin]

63. Oh, my...

I'm going back to bed. :/

[madrchsod]

68. world wide economic depression....

so who`s going to be making money on the collapse.

[masmdu]

70. Consider This...Stats on RealEstate

Nationwide stats for REAL ESTATE in the U.S.

50% of all houses are Prime loans
9% of all homes are Sub-Prime loans
6% of all homes are FHA/VA
35% of all homes are owned free and clear

Currently, 2% ofall loans are in foreclosure.

[SHRED]

72. Credit Unions??

I belong to a credit union.
What is the difference between them and a bank and are they LESS vulnerable??

Thanks

[peacetalksforall]

75. I would like to hear opinion on your cu question, also, I assume they

did not make bad loans, but are still subject to FDIC backing - if there is backing.

[Pale Blue Dot]

84. The conventional wisdom is that credit unions are much safer. However,

It's worth pointing out that 4 credit unions failed last month alone.

You can get updates here: http://www.ncua.gov/

[Lint Head]

74. The criminals in the White House want to hide the coming

disaster from the American people. They want to get McCain in the White House before the shit hits the fan. That way we can be totally controlled because we will be beaten down and will follow anyone, even corporate fascists. The next step is to have private corporations torture people that don't agree with their ideology. McCain is a pawn in this entire scenario. :dem:

[masmdu]

76. Check Safety of YOUR Bank/CU here...(link)

http://www.bankrate.com/brm/safesound/ss_home.asp

[Lorien]

90. My CU is four star- "sound"

It's a hassle to drive out to Disney to make deposits, but I've never felt quite right about putting my money in Suntrust (one of the only options in this area). I guess that my gut instinct was right! Suntrust only has a three star rating.

[DemReadingDU]

103. Don't Count On The "Safe & Sound" Rating Of Bankrate.Com

The bank that failed a couple weeks ago, First Heritage Bank, was rated 3

more info...
http://globaleconomicanalysis.blogspot.com/2008/07/dont-count-on-safe-sound-rating-of.html

[Lorien]

121. My credit union has a four starr rating and has never done sub prime

lending or any other "creative" loan. It's actually pretty hard to get any kind of loan from them, so I think that it's safer than most.

[DemReadingDU]

123. My credit union hasn't done subprime either, but

If people start losing their jobs and can't pay their loans, the default rate will increase. If a credit union has too many defaults, or maybe too many people remove their savings to pay bills, the credit union could become at-risk.

[Texano78704]

116. Reversed

Four stars actually means "below peer group," with five stars being the worst rating.

http://www.bankrate.com/brm/safesound/brm_explain.asp

[DemReadingDU]

117. bankrate 5 stars is the best , or CAEL = 1 is the best

The most desirable Safe & Sound® CAEL rating is one, the least desirable is five

The top star rating is five, the lowest star rating is one.
http://www.bankrate.com/brm/safesound/brm_explain.asp

[bikebloke]

91. I'm looking for a new bank.

A week or tow ago someone posted the link following a Mike Whitney article on Smirking Chimp. My bank has really dropped. So far all the other nearby banks are in the same quicksand.

[Joanne98]

78. This is why we shouldn't have given Paulson a blank check.

[Megahurtz]

126. Yep.

Lotta good that did.

[FlaDem83]

79. It has started here in Florida...

First Priority bank in Bradenton just failed on Friday. My husband works in a small community bank in Manatee county (which is well capitalized and fiscally sound) and passed a First Priority Bank branch this morning on his way in - depositors are lining up in order to talk to some of the FDIC field agents out there.... It is definitely going to get worse before it gets better.

[bobd0]

81. Is anyone surprised? Another Bush, another banking scandal.

Where's John McCain and the Keating Five?

[Joanne98]

82. Where's there's a Bush, There's a banking scandal. Three generations now.

Although I'm having a hard time figuring out this one. Where is the money going?

[GliderGuider]

87. Here's why we may be in for massive, sudden deflation

This analysis is by one of the editors of my favourite financial blog, The Automatic Earth.

It isn't inflation that we are facing - it's deflation. Inflation is an increase in the money supply relative to available goods and services and the deflation is the opposite. Inflation is NOT rising prices. Rising prices are instead a common symptom of inflation.

During a credit expansion, credit serves as a money substitute, inflating the effective money supply until the bubble bursts, whereupon credit ceases to be so considered and the money supply therefore effectively collapses. Credit expansions, unlike currency inflations, are self-limiting phenomena. The system eventually loses the ability to service the debt created and the bubble implodes, which is what is happening now. The loss of credit leaves only actual money to function as money, and people are about to discover that there's nowhere near enough of it for an economy to function. Money acts as the lubricant in the economic engine, and without it that engine will seize up. When this happens to an economy, a depression results. We are well on the way to a rerun of the Great Depression, only this event will be much larger in scope. It's global this time, and the scale of the excess has been much greater by every measure.

Governments and central banks will try to increase the money supply by monetizing debt (a money-printing equivalent), but with a psychological shift to cash hoarding taking place, that will not serve to increase liquidity. The additional money will be hoarded, no matter how much is poured into the black hole at the centre of the global financial system. The velocity of money will drop dramatically on top of credit contraction. Plus, the attempt to 'print their way out of it' will cause risk premiums on government debt to rise substantially. By extension, the interest rates on all other debt will also rise, and as credit spreads (the interest premium over treasures) will be rising as well, all borrowing will become very, very expensive, even in nominal terms. In real terms, adjusting for a collapsing money supply, interest rates will be even higher - the nominal rate minus negative inflation. This will be the equivalent of pushing the 'emergency stop button' on the economy.

Cash will appreciate in value relative to virtually everything else for a while, or in other words, we will see an asset price crash across the board. Even commodities are going to fall substantially in price. Gold topped out some time ago, as did oil recently. That's not to say that oil isn't peaking, but that a combination of speculation shifting into reverse and demand destruction through deflation will bring prices down temporarily, at least in nominal terms. In real terms, prices may well rise as purchasing power will probably fall faster than price, meaning that nominally cheaper oil will be less affordable than it is now. Eventually, we're likely to see a resource grab that will crash supply to the same extent that depression will crash demand, at which point oil will go through the roof, but we're not there yet. We have other hurdles to jump first.

You need to hold cash and cash equivalents (short term treasuries) and have no debt. High real interest rates will mean the value of cash and the burden of debt will both be very high. Conveniently, cash will appreciate whether or not you hold it in a bank, and you shouldn't trust a banking system on the brink of being revealed as insolvent. The FDIC hasn't got a prayer of being able to bail out all the depositors, even with access to the discount window. IndyMac alone used approximately $8 billion of the $51 billion fund, and they weren't even on the troubled list before they collapsed. That troubled list is very long.

There is basically no such thing as a safe level of mortgage debt. For many people, getting out of debt means renting. The good news is that rents will fall substantially, and if you preserve your capital in liquid form now, you should be able to purchase virtually any property you want in a few years time.

[ozone_man]

96. I think deflation has started.

It's already started with housing prices, stock market, and now commodities will be deflating, as the debt bomb implodes our economy.

This economic downturn is going to be much larger than the 18 month downturn that economists predict. It'll be many years and will turn into a major depression.

[DemReadingDU]

108. This is my favorite financial blog too!

A couple months ago, I found a link that you referred us to read. Great info!

[defendandprotect]

110. What's the procedure for buying Treasury notes . . ?

presume "short term Treasuries" ONLY will do it ---

get rid of CD's . . . ???

What about State bonds . . . silly question . . . my state is in lots of financial trouble.


PS: Did you specifically mean to say Treasury "notes" ....

I'm just looking at this info at Wiki --

http://en.wikipedia.org/wiki/Treasury_security

Would US Savings bonds be OK --- I think they're easier to buy?

And what about Treasury "bills" ---

As I recall the Treasury stuff --- other than savings bonds -- it was a bit awkward to

purchase.

HELP!


PSS: I also found this --- buying directly from the Treasury

http://www.treasurydirect.gov/

Any other advice you can throw in will be helpful ---

We just bought some CDs last week --- and don't have a lot but anything that matures

now I'd prefer to do Treasury ---

[DemReadingDU]

112. I have bought Treasury Bills using TreasuryDirect

It took me awhile to read, and set it up. But it's easy to purchase the Treasuries. It is linked to my checking account at a credit union.

[defendandprotect]

118. Thank you very much . . . !!!!

[windoe]

89. Saddest thing to me is that Americans will just take it sitting down.

Only some people have been awake enough to watch this country be taken apart brick by brick, and for some reason we are not able to do anything at all about it?

What used to be more obvious looting, raping and pillaging now is covered up by the mindwiping media, who will spin this shit around and attempt to make it smell like honey. Too many people are mindwiped, and I strongly believe the internet is the best thing we have, but it also serves as a buffer and outlet for people's anger and frustration--

Bush&Co have committed nearly a perfect crime, the biggest heist in American history (like I wrote in 2002) and they are fucking getting away with it.


Citizens should refuse en masse to do any business with these criminals-- to have ANY property confiscated by this criminal system, hang onto and defend your property, and DEMAND the system that we worked and payed into honor THEIR end of the agreement!! We forget that being a citizen, working and doing business is an AGREEMENT. We agree to obey laws, pay taxes, stop at fucking stop signs and not beat the crap out of each other. Most of us have done all this.
I say the agreement is null and void (not the violent part), and since they broke this contract, it must be renegotiated!!!!!

Come on grow a nut people.
:rant:

[Pale Blue Dot]

94. Many - even on this board - are refusing to believe it's even happening.

People who look at the evidence and see all of the crimes the Bush family have committed are ignoring the evidence of the economy. It's depressing - worse, it's one of the reasons why this happened in the first place.

[fascisthunter]

95. Every time Conservatives/Republicans are in Power

we see the same shit over and over again. When will people wake the fuck up!

[Cronus Protagonist]

102. Never, because it's not a sleeping problem, it's much, much deeper than that

It's a factor of several things economic, social and personal, and the result is always inevitable.

[defendandprotect]

119. Well, for one thing, Americans could begin to question Capitalism . . .

and especially to challenge the assumpition that it has anything to do with democracy ---

Capitalism and democracy are NOT synonymous --- !!!


Capitalism is a ridiculous "King-of-the-Hill" system intended to move a nation's wealth

and assets out of the hands of the many and into the hands of the few.


And this last round has been terrifyingly successful!!!

[DaLittle Kitty]

98. VOTE OUT ALL INCUMBENTS! We Are In For A Rough Consequence From The Corporatist Klan

of Go Along Get Along Politicians from BOTH Parties... DUMP THEM ALL!

[redqueen]

111. "privatizing the gains and profits, and socializing the losses as usual."

*sigh*

[JeanGrey]

113. Well that's it then, we don't have trillons. After that

mortgage bail out this should bankrupt the country.

[Imagevision]

128. No worries, M$M will notify us after closings begin... (maybe)

[dothemath]

130. Ace in the hole ...............

There is still an 'ace in the hole' no one is talking about, as far as I know.
And that would be eliminating the reserve that banks are required to have in cash as a percentage of the amount of money they can lend. No reserve requirements - codified by our elected representatives - ergo, banks, by definition, cannot be insolvent. Can't be broke. Can't be closed. Bonuses for mismanagement will rise to billions of dollars. Is this a great country, or what?

It has de facto been eliminated already through manipulation of what their obligations are versus myriad ways of covering up the true picture. One example - hundreds of billions of dollars of non-performing loans just don't quite get posted as such until the bank decides they are non-performing. What's the big hurry? Particularly in today's climate of taxpayers ultimately being on the hook for losses - period. And if the people in power ignore the fact that we are not far from the time when China, Japan, Saudi Arabia, Europe, et. al. lay claim to what they own - that would be us/US - we will have the new world order the neocons have so fervently desired. The form it takes won't be quite the one they had in mind, though.

The crash of '29 will be a walk in the park compared to what is coming. And it is coming.

[TankLV]

136. OK, so our comparisons of our repuke controlled country to the NAZI's just took a little longer...

can we all stop avoiding the obvious comparisons now?!?!

another IDENTICAL comparison falls into place, sadly...